China Keeps Benchmark Lending Rates Unchanged

China opted to maintain its benchmark lending rates for a third straight month as a weakening yuan limited room for monetary policy easing.

Rising pressure on the yuan has curtailed the likelihood of immediate rate cuts.

Reuters reported that the one-year loan prime rate (LPR) stayed at 3.1%, while the five-year LPR held at 3.6%.

The decision aligns with Beijing’s strategy to balance economic recovery with currency stability. While October 2024 saw significant rate cuts to stimulate growth, the Chinese economy achieved its 5% growth target last year, reducing the urgency for further monetary easing.

Rising pressure on the yuan has curtailed the likelihood of immediate rate cuts. Measures such as verbal warnings, capital flow adjustments, and offshore yuan bill issuances have been employed to stabilize the currency.

The Politburo signaled last month that China would adopt a more flexible monetary policy alongside proactive fiscal measures in 2025, marking its first easing stance in 14 years.